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Why should I prearrange my funeral or burial?
If I pre-plan and prepay my funeral, how do I know
that the money will be there when I die?
If I prepay my funeral, what happens to the interest
that my money earns?
Can I change any of these prepaid funeral services
later?
What if your funeral home changes ownership?
Is there a pre-payment penalty for paying off these
arrangements in advance?
Can social services take my pre-arrangements away
from me?
Why should I prearrange my funeral or burial?
When you plan ahead, you will be able to compare the many options available. You will be able to compare the services, the products and the prices among different companies. You will have the opportunity to make an informed decision about your funeral and cemetery arrangements, and the form of memorial you prefer. You will be able to make choices that are meaningful to both you and your family, and you will gain peace of mind knowing your family and friends will be relieved of the emotional and financial burden often associated with making arrangements when a death occurs. In addition, by prefunding your funeral and cemetery services, a guaranteed price contract will allow you to purchase at today's prices, free from inflationary pressures in the future. (Check to determine whether prices are guaranteed). Your local funeral or cemetery provider can help you pre-plan.
If I pre-plan and prepay my funeral or burial, how do I know that the money will be there when I die?
If you decide to prepay your funeral or burial prearrangements, there are generally two methods to assure the funeral home's and/or cemetery's performance. Your money is either used toward a premium to purchase life insurance whereby the policy proceeds will pay for your arrangements, or your funds -- either the entire amount or a portion of them -- will be deposited into a trust fund account to defray the provider's costs. Either method should be disclosed to you and the contract should state whether or not the purchase price is guaranteed; that is, whether you or your family will have to pay additional amounts on the items you have selected in the contract. A guaranteed price contract means that no further payment will ever be required beyond the price stated in the contract for the items you are purchasing.
If I prepay my funeral, what happens to the interest
that my money earns?
If you have a prearranged funeral or burial agreement that is comprised
of items that are guaranteed to be performed by the funeral home or cemetery at no additional cost to you, the
interest (or growth if a life insurance policy) is retained by the funeral home/cemetery to offset the rising costs
of those specified goods and services over time. That's the value of prearranging and prefunding at today's costs!
Can I change any of these prepaid funeral services
later?
Changes are generally possible, but be careful. When changes are made, they
oftentimes affect the terms of guarantees that were created under the original agreement. In the event funds paid
toward a funeral plan are excludable resources for purposes of receiving social services (SSI or Medicaid), changing
the terms of that agreement could jeopardize one's qualification for assistance. It is not recommended that irrevocably
assigned funeral plans be changed in any way.
What if your funeral home or cemetery changes
ownership?
Prior contractual agreements are not voided simply because a change of ownership
occurs. The funeral planning agreement you have with the prior ownership is carried forward with successor owners
as part of the purchase agreement.
Is there a pre-payment penalty for paying off
these arrangements in advance?
It's not uncommon to have a small processing fee associated with an early
payment, but it should not be construed as a "penalty." In the long run, there is usually a good amount
of money to be saved by paying off early. Of course, funding agreements vary. Please be sure to check the terms
of your (or your proposed) funding agreement for details.
Can social services take my pre-arrangements
away from me?
Take away? No. Challenge the amount being set aside to pay for an expensive
funeral? Yes. Funds set aside to pay for a reasonable funeral arrangement are not counted as assets as one
qualifies for social services. Your local
funeral director can provide counsel regarding the amount local social
services agencies consider reasonable and customary to spend on a funeral.
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